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The research reports excerpted here were issued recently by investment and research firms. Many may be obtained through Thomson Reuters at www.thomson.com/financial or 800-638-8241. Some are available in the company-research area of WSJ.com, or through Factiva.com. Some of the reports' issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

AmTrust Financial Servicesafsi -0.3425892535160476%AmTrust Financial Services Inc.U.S.: NasdaqUSD27.635
-0.095-0.3425892535160476%
/Date(1481301811225-0600)/
Volume (Delayed 15m)
:
66108
P/E Ratio
11.923990498812351Market Cap
4726606263.67905
Dividend Yield
2.462875769648678% Rev. per Employee
861284More quote details and news »afsiinYour ValueYour ChangeShort position
• AFSI-Nasdaq Market Outperform • Price $26.61 on April 9 by JMP Securities We reiterate our Market Outperform rating and $30 price target on AmTrust Financial Services following our recent meetings with management. We continue to find the shares attractive, given the [property casualty insurer's] strong return-on-equity outperformance, which we expect to continue for the foreseeable future. AFSI has produced an ROE superior to its peers over the past several years (22% average over the past five years, versus 14% for its peers)—in large part because of the company's efficient use of capital created by leveraging its underwriting returns with fee income and a sustainable lower-risk growth model.

We find AFSI's premium price/book valuation to be warranted. Our peer group (consisting of five underwriters and two brokers, to reflect AFSI's hybrid model) trades at an average price/book multiple of 1.6 times and a 2012 estimated price/earnings multiple of 21 times, with an average ROE of 9%. Shares of AFSI currently trade at 1.8 times book value and nine times 2012E EPS, with 2012E ROE of 17%. Our $30 price target is 1.7 times our estimate of one-year forward book value and 10 times 2012E operating EPS. Market cap: $1.6 billion.

CB&I announced a contract valued at around $300 million to supply ethylene technology, cracking furnaces, and EPC [engineering procurement and construction] for the expansion of the Williams Olefins petrochemicals plant in Louisiana. We expect plant capacity to increase to 1.95 billion pounds per year, from 1.35 billion pounds per year.

Decreased feedstock costs have resulted in stronger operating margins for U.S.-based petrochemical producers, catalyzing expansion and new-facility planning. In turn, E&C firms appear poised for new opportunities in front-end engineering, technology procurement, and construction for multibillion-dollar petrochemical facilities…where grassroots projects can cost between $2 billion and $5 billion, while expansions should generally cost between $100 million and $2 billion.

We expect low-priced natural gas, a supportive dollar, and a favorable oil-to-gas price ratio to catalyze U.S. investments in petrochemical (primarily ethylene) facilities, mostly for export, for several years. Multiple top petrochemical firms have already signaled intentions to either build grassroots crackers (i.e., the petrochemical site that turns ethane into ethylene and other chemicals) or to expand current petrochemical capacity. We expect bottleneck clearing and expansions to come online first. Market cap: $4.2 billion.

The company plans to open three new stores in fiscal-year 2013, two in Colombia and one in Costa Rica. The first Colombian store is performing very well. We increase our second-half estimate and our FY13 EPS estimate driven by strong comps [comparable-store sales] and planned new-store openings.

Profitability at the initial stores in a new geography are typically below that of the company average until more stores provide better local purchasing power. PSMT's success in its markets may attract competition from other warehouse operators. We increase our price target to $87, up from $80. Market cap: $2.2 billion.

Riverbed Technology
• RVBD-Nasdaq Buy • Price $27.19 on April 9 by MKM Partners Riverbed's first-quarter 2012 results [due after the market's close on April 19] are likely to come in slightly ahead of our cautious guidance, and we maintain our Buy rating.

We recently spoke with more than 20 value-added resellers (VARs) of networking equipment in the U.S., nearly a quarter of which work with Riverbed products. We believe demand for the xx50 series Steelhead WAN-OPT platform has been strong in U.S. Enterprise and solid in U.S. Federal.

The company guided first-quarter 2012 sales down by 8% to 10% quarter/over/quarter, to $183 million to $187 million, due to the introduction of the Steelhead and Steelhead EX product families [for virtual-services platforms]. Our U.S. checks suggest that 1Q12 may have been slightly ahead of plan, and we expect management to confidently guide 2Q12 sales more or less in line with consensus, up 9% quarter/over/quarter. We maintain our $32 price target, based on 25 times 2013E earnings per share, and feel comfortable owning through 1Q12 earnings. We will continue to closely monitor the product transition during the second quarter. Market cap: $4.5 billion.